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IntroductionComputer and video gaming is a big business. The industry is often said to be bigger thanHollywood, but that's not quite true. (In the United States, game sales totalled US$7.4 billion in 2006, while box office takings totalled US$9.5 billion, and both increased by 6%). Still, gaming is an activity to which many people devote serious amounts of time, effort and money.These people are often light consumers of media, and so are hard to reach with traditional advertising. Games, then, are a great way to communicate with an engaged, passionate andhard-to-reach audience. However, because gamers can be so passionate about their gamingexperience, unwary brands can damage themselves by inserting messages too intrusively in agame, in an inappropriate manner. Advertising to gamers is an activity that should beapproached with care.

US market research group eMarketer estimates that US$0.7 billion was spent globally on in-gameadvertising in 2006, and thinks this will grow by 140% to US$1.7 million in 2009. This represents 0.2%of total worldwide ad expenditure by our measure (in our Advertising Expenditure Forecasts) in2006, and 0.3% in 2009. In-game advertising is small compared to most of the traditional media(except cinema advertising, which totalled US$1.8 billion in 2006), but it is growing very rapidlyacross the world. For this fourth edition of Fast Forward we decided to take a look at how in-gameadvertising is developing in Asia Pacific, with the help of our local offices. We looked at China,already one of the largest advertising markets in the world and one that has huge potential for further growth. We looked at fast-moving Japan and South Korea, so often at the leading edge of technological change. And we looked at Vietnam, a representative developing market with ayoung population, where gaming is becoming part of mainstream culture. We have concentratedon how advertisers can use existing games to reach gamers; we have not touched on the related topic of ‘advergaming’ – designing new games specifically to promote a particular product or brand

Thanks to Meg Wu from China, Takeshi Mizukawa of Dentsu Inc, Japan, Kim Yong Sung and ChrisShin from South Korea and Venkat Kotamaraju from Vietnam for their contributions, Joshua Kimand the SCOOP team from Hong Kong for their translation work, and a big thanks to Matt Semplefrom Hong Kong for organising all the contributions.

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Introduction to in-game advertising...........................4

How gamers react to advertising........................5

How is the Return On Investment measured?,Types of online games...........................................6

Who plays games online?.....................................7

What types of advertisers use games?...............8

Contents

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Banner on loading screen

Sponsored in-game items

In-game text links

In-game video ad

In-game banner

It has been possible to buy ads in video games for a fewyears now. However, until fairly recently these generallyappeared only in a few games that simulated environmentswhere ads would be expected to appear, such as racinggames with race track posters. These ads would be put inposition when the game was being produced - often sometime before the game was available in shops - and then staythere over the game's lifetime.

Now that many people play games online it is possible to insert ads into games at short notice,and even create campaigns that integrate brands into the game-play. There are many ways of using online games to advertise to their players. We asked our local offices to describe the most common forms.

China: In-game ads can be simple text links or banners, like those that appear on websites.These can be placed on loading pages (which game players are presented with for

a few minutes as they download the game), or as part of the playing area within the game itself. It is also possible to place video ads that play in the background of a game.

But it can be better to use product placement: to integrate the product in the context of the game. The product can be made into a tool that is used in thegame, or it can appear in a dramatic scene. This avoids the hard sell and players are more likely to react to it favourably.

South Korea: In-game displays and in-game items are the two most common types of ads. In-game displays give exposure to an advertiser'sproducts, and associate them with the game. In-game items are rewards

that are given out as incentives to loyal gamers who have participatedin promotions. The promotions themselves are good ways ofengaging with gamers, and this engagement is reinforced everytime a gamer uses an item they have won.

Vietnam: Some marketers have been known to extend their sponsorship of an online game by holding special events and promotions for players.

Introductionto in-gameadvertising

How gamers react to advertising

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In-game advertising works best when it is relevant to thegame, when it becomes part of the game, and when itencourages the active participation of the gamer.

China: In-game advertising is a form of marketing to fans. Like sport marketing, it is a good way to forge a relationshipwith a group of consumers by creating an association with oneof their favourite activities. The gaming environment is not ascluttered as websites, so ads are morelikely to grab players' attention, andbecause players devote a lot of time andattention to games these ads are good atbuilding awareness.

The best way to use games is not just to adver-tise, but to integrate the product into the context of the game in a clever way. If this is done well andit is fun, game players are likely to accept the product and interact with it, by 'eating' a branded hamburger in a virtual fast-food restaurant, for example.This works even better if the product placement is combined with a real-world campaign. For example, players can collect promotional points from softdrink cans, and then use these points to get special items inthe game. Or players who complete certain tasks in the gamehave the chance to win a new laptop.

Even basic ads can do well in games, particularly since there are notmany brands present in games at the moment and so there is littleclutter. However, if the ad is not relevant to the game and gets in theway, it risks annoying the players.

Japan: If the ad is simply a banner within the game, players mayignore it or resent it as an obstruction. Players are more likely torespond to an ad - such as by visiting the relevant website orrequesting brochures - if the ad is related to the story of thegame.

Creating incentives helps maintain the relationship between thead and the game, such as offering discount coupons that give players bigger discounts for higher scores.

South Korea: Giving away in-game items or other rewards canbe a very effective way to attract the attention of players and to strengthen the associationbetween the brand and the game.

A great example of effective in-game advertising was a partnership between a soft drink brand and Kartrider, a very popular racing game. As well as in-game displays and in-game items, the campaign introduced a whole new race track designed to display the advertiser's brand.

becauseviewers have more choice andpower over what they watch.However, the technology that

gives viewers this choice andpower also allows

agencies

forgea stronger relationship betweenthe viewer and the brand.

Nick Lawrie (Sponsorship Intelligence): Media owners are now offeringmuch more diverse platforms, so amarketer can come in with cre-ative ideas for a 30 second spotbut also link into all sorts of other

media elements.

tounderstand more about viewersand assess the effect of televisionadvertising more accurately. Itallows agencies to extend cam-paigns that are based on the 30second spot into other forms ofmedia and marketing. These work

together with the spot toengage the viewer

and

Agencies have to makebetter use of

the spot

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Types of online games?

How is the Return OnInvestmentmeasured?

China: Text links or banners can betracked in the same way as similar ads on

websites: by measuring the number of times gamerssee an ad (the number of impressions) or the number of times

they click on it. The cost per impression or cost per click can then becompared with other forms of digital advertising.

Product placement is more difficult to evaluate. If it involves an in-game item, then the number of times that item is used is one

measure of its effectiveness. If it involves a promotion, then the number of people who participate is another.

Japan: If the game is the downloaded type, then its value can be measured by tracking thenumber of downloads, the duration and frequency of play, and by monitoring the actions players

take after they have finished playing.

MMORPGs:MMORPGs:Massively MultiplayerMassively Multiplayer

Online Role-Playing Games.Online Role-Playing Games.These are games in which These are games in which

players (potentially many thousands of them)players (potentially many thousands of them)assume the roles of fictional characters and control theirassume the roles of fictional characters and control their

actions, and interact with each otheractions, and interact with each other, in virtual worlds. , in virtual worlds. Players normally devote a lot of time to developing their characters.Players normally devote a lot of time to developing their characters.

Examples include WExamples include World of World of Warcrafarcraft, Fantt, Fantasy Journey to the Wasy Journey to the West andest andLegend of Mir 3.Legend of Mir 3.

Casual/lobby games:Casual/lobby games: Games that players can play quickly and casuallyGames that players can play quickly and casuallyagainst one or more other players, ofagainst one or more other players, often aften after logging into a 'lobby' ter logging into a 'lobby'

website that matches opponentwebsite that matches opponents together for a short game. Exampless together for a short game. Examplesinclude Kartriderinclude Kartrider, , Audition and BnB Audition and BnB Adventure.Adventure.

Battle games:Battle games: In these games, players tIn these games, players take control of virtual armies andake control of virtual armies andfight battles against each otherfight battles against each other, for example S, for example Sttarcrafarcraft and Wt and Warcrafarcraft3.t3.

Chess and card games: Chess and card games: These are simply online These are simply online versions of traditional games.versions of traditional games.

PVRs and internet video make iteasier for viewers to avoid ads,though by no means all those whohave the ability to avoid ads actually do. Still, the spread of ad-avoidance technology makes itimportant to ensure that ads arerelevant to viewers, and to giveviewers reasons to pay attention to them.

Rupert McPetrie (ZenithOptimedia): Theconventional wisdom is that traditionalmedia is suffering as technology devel-ops. To a degree that's true, but peopleactually watch more television whenthey have more choice. We have to be

a bit smarter about where we try toreach these people because

the audience is more frag-mented, but more choicedoes mean more viewing.

When you look at early audi-ence data from homes withPVRs, a lot of programmeswere being recorded and a lotof the playback was being fast

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Whoplays

gamesonline?

The most developed gaming market is South Korea, where more than a third ofThe most developed gaming market is South Korea, where more than a third ofthe population plays online games. China has the most gamers, howeverthe population plays online games. China has the most gamers, however, and, andthe most potential for growth, since these gamers represent only 4% of the the most potential for growth, since these gamers represent only 4% of the population. population. As you might imagine, teenage boys and young men are the As you might imagine, teenage boys and young men are the keenest players of games, but plenty of women and older people play too.keenest players of games, but plenty of women and older people play too.

China: China: According to the latest survey by I-research, there were 46 million onlineAccording to the latest survey by I-research, there were 46 million onlinegamers at the end of 2006. gamers at the end of 2006. This was 34% of internet users but only 4% of the totThis was 34% of internet users but only 4% of the totalalChinese population, so there is plenty of potential for growth.Chinese population, so there is plenty of potential for growth.The number of gamers is growing at 20%-33% a yearThe number of gamers is growing at 20%-33% a year..

83% of gamers are male, and young men - p83% of gamers are male, and young men - particularly studentarticularly students - are heavily s - are heavily represented. 33% of gamers are aged between 19 and 22, and 32% are studentrepresented. 33% of gamers are aged between 19 and 22, and 32% are students.s.

On average gamers spend about RMB40 (about US$5) a month on their hobby - on On average gamers spend about RMB40 (about US$5) a month on their hobby - on subscriptions, customised items and so on - and devote about six hours a day to subscriptions, customised items and so on - and devote about six hours a day to playing. playing. This is more time than they spend on any other form of media, This is more time than they spend on any other form of media, such as watching television.such as watching television.

JapJapan: an: About 30 million people play games online in JapAbout 30 million people play games online in Japan. an. That's about 35% of That's about 35% of internet users and 13% of the totinternet users and 13% of the total population. al population. Those who play games include not Those who play games include not just young men, but also women, the middle aged, and families. Men spend thejust young men, but also women, the middle aged, and families. Men spend thelongest playing (more than an hour a day on average), while teenagers and women longest playing (more than an hour a day on average), while teenagers and women in their forties spend the shortest time (less than 15 minutes a day). in their forties spend the shortest time (less than 15 minutes a day).

On average, players perhapOn average, players perhaps spend about ¥400 (US$4) a month playing games ons spend about ¥400 (US$4) a month playing games ontheir mobile phones, and about ¥2,300 (US$21) a month playing games on their PCs.their mobile phones, and about ¥2,300 (US$21) a month playing games on their PCs.

South Korea: South Korea: According to Koreanclick, 17 million people played games online in According to Koreanclick, 17 million people played games online in March 2007. March 2007. That's fully 50% of internet users in South Korea, and 35% of the totThat's fully 50% of internet users in South Korea, and 35% of the total al population. population. The popularity of gaming seems to have peaked, howeverThe popularity of gaming seems to have peaked, however. In March 2005, . In March 2005, when the craze for Kartrider - an online racing game - was at itwhen the craze for Kartrider - an online racing game - was at its height, there were s height, there were 18 million players. 18 million players. At the moment the number of players is stAt the moment the number of players is stable, if not in slightable, if not in slightdecline.decline.

The average male player is aged between 25 and 34, while the female players areThe average male player is aged between 25 and 34, while the female players areaged between either 9 and 14 or 25 and 29. Gamers play for an hour a day on aged between either 9 and 14 or 25 and 29. Gamers play for an hour a day on average, and spend Waverage, and spend Won 7,000 (US$7) a month on their hobbyon 7,000 (US$7) a month on their hobby..

VVietnam: ietnam: The industry leader VThe industry leader Vinagames estimates that 6 million people (mostly young inagames estimates that 6 million people (mostly young people) buy pre-ppeople) buy pre-paid cards to play games online (40% of internet users and 7% of the aid cards to play games online (40% of internet users and 7% of the population). population). This number has grown by about 140% over the last yearThis number has grown by about 140% over the last year, , and is expected to continue to grow at this sort of rate for the next couple of years.and is expected to continue to grow at this sort of rate for the next couple of years.

Gamer players are typically teenagers and young adultGamer players are typically teenagers and young adults, who attend s, who attend school or college.school or college.

So far, the advertisers that havemade the best use of in-gameadvertising have tended to bethose that specifically target thesort of young people who aremost likely to play games, or those that are associated withgaming. However, it has the

potential to be of wider use foradvertisers in general.

China: In-game advertising has mainly been used by some FMCG brands (such assoft drinks and contact lenses) and IT brands,which use it to reach the young gaming audience.

South Korea: So far the most successful in-game campaigns have been the softdrink partnership with Kartrider mentionedearlier, and advertising in a dance gameby an instant noodle company. Its noodleswere popular in the PC rooms wheregames are commonly played, so it hadan obvious association with gaming.

Vietnam: Currently mobile and fixed-line telecoms companies are at theforefront of using online gaming.

On the face of it, in-game advertising seems most suited tobrands that target the sort of

people who spend the most timeplaying games: young people,

who spend most of their timeout of their house. However,

these people should notjust be targeted becausethey are the main users of particular specialistproducts; they are alsovery influential in formingothers' opinions of brands,and they make up a largeproportion of the adultpopulation in Vietnam.

So in-game advertising does not have to

remain the exclusive preserveof youth brands - mainstreambrands can make use of it too.

If you have any questions or would like to discuss anything you have read here, please contact your local ZenithOptimedia office or Jonathan Barnard, Head of Publications (+44 20 7961 1192, Jonathan.Barnard@zenithoptimedia.com).

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